I don't want people to forget about Romney's taxes, and every time you take a look at the 203 pages from his 2010 returns, there's always something interesting to revisit. Some of this stuff was touched on back in January when he released the returns, but I thought it deserved more attention now that he is absolutely refusing to turn over more returns.
I'm not a tax account, or a tax lawyer, but I have a really bad habit of actually reading contracts and legal documents, and I do my own taxes which is a pain. So I decided to take a laymen's look at Mittens taxes, and they are REALLY, REALLY weird. There's a lot of stuff that makes an ordinary person stand up and say, how the hell can they get away with that?!
The entire returns can be found at the Washington Post, Mitt Romney's 2010 tax returns.
As I was looking through these 203 documents I came across this on page 131. It's titled Section 83B. It's a letter signed by Romney's tax preparer that I think allows Ann Romneys "blind trust", to take some of the restricted stock from Mitt, without paying any taxes. This is a strange document, and really epitomizes some of the complex loopholes that those that can hire expensive accountants take advantage of.
But in order to do this, you have to meet several requirements from the IRS, and these caught my eye.
...
2) A Partnership interest in Bain Capital Partners...
...
5) ...Is subject to forfeiture if I cease performing services for the partnership.
6) The fair market value of the property at the time of transfer to me was $0.
7) Amount paid for the property $0.
8) A copy of this election has been provided to the person for whom services are performed.
...
What really caught my eye, was the part about performing services for the partnership. After digging around at the IRS, this particular 83B section usually has to be exercised within 30 days of the stock agreement, and you have to actually provide services to the company.
So in my mind, Mitt claims he didn't work for Bain when they were practicing much of their vulture capitalism, and yet he wants to take a tax advantage for people who actually work for a company.
Most of the press went through Mitt's 2010 returns with a fine tooth comb back in January when he released them, so here's what people were saying about this particular section of his returns.
From DailyKos's ClevelandAttorney back on April 10:
Not bad for a guy that is "retired". Except the fact of the matter is, as I see despite Bain's letter saying he left 13 years ago, he still holds an interest. Technically under tax law he is still a partner. Further in the 1040 he has a letter from 2010 regarding n 83(b) election regarding Bain and a Transfer to one of the Blind Trusts (someone sent on behalf of trust, not Romney). What an 83(b) letter (election) is is something that directs the IRS to tax the stock (usually) at the time of the grant (when it may be worth very little or when payment is made), minimizing potential tax. For example his letter goes on to state that the value of the transfer is $0.00 because the interest in future appreciation is subject to forfeiture "if I cease performing services for the Partnership". Hm. I thought that you didn't work for them? Why bother making an 83(b) election if you have nothing to do with them, other than to have no tax to pay ever on the property transferred when you do perform for them? What's more he it is identified as a partnership interest.
ClevelandAttorney's
in dept analysis of Mitt's 2010 returns.
From Floyd Norris at the NYT back in January:
...
Mr. Malt signed letters electing to use Section 83(b) of the tax code in connection with Mr. Romney’s carried interest from two Bain partnerships. Such an election may or may not be legal, but it is certainly unnecessary.
... Mr. Malt’s letters stated that the carried interest “is subject to forfeiture if I cease performing services for the partnership.”
Just who was that “I” is not clear. The trust performed no services, and neither did Mr. Malt. Nor do the Romneys claim to have done any work for the partnerships. Moreover, the Romney campaign says the interest is not subject to forfeiture. In other words, the letters are untrue. When asked, the campaign conceded as much, but said there was no harm in filing the false statements since the tax obligation was not affected.
But this letter from Romney's tax preparer isn't the end of the story. How many people reading this have to worry about carry interest on their restricted stock options from their partnerships? How many have used Section 88(b)? Not very many is my guess.
This section is probably mostly used by the 1%. But this section wasn't good enough. The complex deals made by the 1% aren't good enough to dodge enough taxes, so they ended up challenging 83(b). The IRS had to issue clarifications through Procedure 93-27, and then a clarification of the clarification with procedure 2001-43. And it's still not good enough!
For example, they did not address what happens when the individual holding an unvested interest terminates employment prior to vesting - what happens to the build-up of previously taxed but unvested and undistributed income?
So then came procedure 2005-43. And you can bet this won't be the end of it.
This reveals a fundamental problem in our society, the 1% add complexity so that only they can have access to the complex tools they create. Imagine what would happen to the 10's of thousands of pages of tax codes, if all tax laws had to be repealed if it didn't affect at least 2% of the population.
So back to our original question, Did Mitt Romney do work for Bain Capital as late as 2010? His section 83(b) request seems to strongly indicate that he is either lying to the American people about what he was doing for Bain, or he is lying to the IRS for tax purposes. But should we be at all surprised that Mitt Romney is lying?